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FINDLAY — The chief executive officer of Cooper Tire & Rubber Co. said last week that while the outcome of last year’s failed merger with an Indian company was regrettable, he doesn’t regret pursuing the deal.
“If you look back at the merits of this, not just from a shareholder standpoint, but if you look at the merits of a combined company regardless of who was buying whom, the merits of the combined company was very compelling,” Roy Armes, Cooper’s president and CEO, told The Blade.
Coming off its best sales year in 2012, Cooper’s board agreed in the middle of 2013 to an offer from Apollo Tyres Ltd. of India to buy it for $2.5 billion, or $35 a share.
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The deal represented a 43 percent premium to where Cooper’s stock was trading prior to the announcement.
“We still think this was, from a shareholder standpoint, the right thing to do,” Mr. Armes said. “It didn’t turn out that way because we eventually — instead of dragging this out — terminated the agreement at the end of the year. But there’s a lot of things that happened that you wouldn’t have expected to happen during that whole process.”
An arbitrator’s ruling in favor of certain union rights, along with unrest at one of Cooper’s two Chinese plants, helped put the deal on shaky ground. Lawsuits ensued, and the situation created a major disruption for the company.
“Obviously you can pick out one or two things that might be regretful, but if you look at the overall it was something that was going to be compelling and certainly a great shareholder value,” Mr. Armes said.
Little overlap between the two meant there likely wouldn’t be consolidation and job losses for Cooper employees, and it would have given the combined firm better economies of scale and chances for revenue growth.
But Cooper was glad to rid itself of the doomed deal at the end of last year.
Still, Mr. Armes was happy with the year’s financial results.
“As bad as it may have seemed, and the challenges we had ... for it to turn out to be our second-best year in the company’s history was very gratifying,” he said.
Though global sales fell more than 18 percent, Cooper turned in its second-best operating profit on record.
The struggles of 2013 largely have been left there. Cooper easily beat analysts’ first-quarter expectations, and its stock price is up nearly 30 percent since the first of the year. It also hammered out a deal earlier this year with its Chinese joint venture partner to normalize production and determine the operation’s future ownership.
“I think that’s a tribute to the people in the organization,” Mr. Armes said. “We had a very good first quarter, we felt pretty good about the ramp-up we had, we’ve still got opportunities to keep that momentum going, so we felt pretty good about it.”